Survey: 54% of Americans Can’t Handle a $500 Expense

Credit card debt has been on the rise in the U.S. for the
past several years, and it seems that more and more Americans appear to be in a
position where they may not have any other choice but to rely on credit.

In a recent Freedom
Debt Relief survey, 54% of the people surveyed said it would be difficult
(32%) or very difficult (22%) to handle an unexpected expense of $500. It’s
clear that many people are turning to credit cards to make ends meet month to
month, probably due to factors like increases in consumer pricing and flat
wage growth.

42% of those surveyed said that household expenses like food,
utilities, and gas were the biggest contributors to their credit card debt—much
more than retail purchases (17%) and medical bills (13%). While household
expenses were the main driver of credit card debt overall across the country, other
drivers varied by region:

Among men and women, contributors to credit card debt also
varied:

If you find yourself struggling with your finances, here are some steps you can take to get back on track:

1. Talk about Your Situation

Many people find it difficult to open up about their finances—even with close friends and family. But having a support system could lift the burden of financial stress and give you the motivation you need to improve your situation. Don’t be afraid to discuss your finances with people you trust. They could help you get through this rough patch, and might even be going through a similar situation.

2. Start Budgeting

No matter if you want to get out of debt or start an emergency fund, budgeting could help you achieve your financial goals. Downloading a budgeting app or using a spreadsheet to track your monthly income and expenses keeps you financially accountable. Plus, budgeting gives you a better picture of how you’re spending money, making easier to make adjustments that could end up saving you money in the long run.

3. Find Ways to Save

Even if your budget is perfectly balanced, there are always more ways to save money. Canceling entertainment apps you no longer use, unsubscribing from emails that tempt you to spend, and cooking at home instead of eating out are all easy ways to save. You can learn more about simple ways to save here.

4. Pay More Than the Minimum

It’s tempting to just make minimum payments on your credit card debt, especially if you’re dealing with a lot of it. But making minimum payments may end up costing you thousands of dollars in interest by the time you pay off the debt. That’s why you should consider paying more than the minimum each month, using the Avalanche or Snowball Method. You can learn more about these do-it-yourself debt solutions here.

5. Get Debt Help

Depending on how much debt you’re dealing
with, making more than the minimum payments each month might not be enough. Fortunately,
there are many ways to get out of debt with help from debt professionals. Some
of these solutions include:

Debt Consolidation: Using a loan or balance transfer card, you can roll all of your outstanding debts into a single account with a lower rate. Consolidating your debt could simplify your payment schedule and save you money on interest.

Debt Management Plans: Credit counseling agencies, which are typically non-profit organizations, offer Debt Management Plans where they will negotiate with your creditors to reduce your interest rates and fees. Similar to debt consolidation, a Debt Management Plan could save you money by getting you a lower rate.

Debt Settlement: When you work with a debt settlement company, they will negotiate with your creditors to reduce the total amount of debt you owe instead of just reducing your interest rate. This method could save you a lot of money, but only unsecured debt like credit card, personal loan, and medical debt qualifies.

John Russo is a Creative Manager at Freedom Financial Network. His goal is to make the world of personal finance more accessible so that everyday people can find the right financial solutions for themselves. In his free time, he enjoys hiking, reading pretty much anything, and spending time with his fiancée and two cats.

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*Clients who make all their monthly program deposits pay approximately 70-75% of their original enrolled debts over 24 to 60 months. Not all clients are able to complete their program for various reasons, including their ability to save sufficient funds. Our estimates are based on prior results, which will vary depending on your specific enrolled creditors and your individual program terms. We do not guarantee that your debts will be resolved for a specific amount or percentage or within a specific period of time. We do not assume your debts, make monthly payments to creditors or provide tax, bankruptcy, accounting or legal advice or credit repair services. Our service is not available in all states and our fees may vary from state to state. Please contact a tax professional to discuss potential tax consequences of less than full balance debt resolution. Read and understand all program materials prior to enrollment. The use of debt settlement services will likely adversely affect your creditworthiness, may result in you being subject to collections or being sued by creditors or collectors and may increase the outstanding balances of your enrolled accounts due to the accrual of fees and interest. However, negotiated settlements we obtain on your behalf resolve the entire account, including all accrued fees and interest. C.P.D. Reg. No. T.S.12-03825.